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PHL launches US dollar bond issue

THE PHILIPPINE government on Wednesday launched another dollar bond offering aimed to raise funds to cushion the impact of the coronavirus pandemic on the economy.

The offering of 10.5-year and 25-year US dollar-denominated bonds would carry a yield of around 100 basis points above the 10-year US Treasury benchmark, based on the government’s initial guidance, Reuters reported.

National Treasurer Rosalia V. de Leon could not say at this stage how much the government aimed to raise from the bond sale, which follows a similar US dollar bond offering in April that raised $2.35 billion.

The Philippines, one of Asia’s most active issuers of sovereign debt, would use the proceeds from the bond sale to support its budget, the Bureau of the Treasury (BTr) said.

Both chambers of Congress have approved a record P4.5-trillion ($93.7-billion) budget for 2021, part of which will be used to purchase coronavirus disease 2019 (COVID-19) vaccines as the government aims to immunize a third of its 108 million population.

Credit Suisse, Daiwa Capital Markets, Deutsche Bank, Morgan Stanley, Standard Chartered Bank and UBS are joint bookrunners, IFR reported.

S&P Global Ratings on Wednesday assigned a “BBB+” long-term foreign currency issue rating to the Philippines’ proposed dollar-denominated senior unsecured notes.

Fitch Ratings gave the proposed bonds a “BBB” rating with a stable outlook.

In October, the BTr shelved plans to issue panda and samurai bonds this year, after it noted domestic borrowings can cover the financing requirements.

In April, the Philippines raised $2.35 billion from its dollar-denominated bond sale as it sought to boost state coffers.

Ms. De Leon earlier said the government is looking to take advantage of the low yields in global securities during the pandemic.

A trader, who asked not to be identified, said the government is returning to the global bond market to further profit from the low interest rate environment.

“Each time the government can borrow at low rates is good for the country. Especially now that we are looking forward for economic recovery. It is well-noted by many economists that the Philippines has to do more on the fiscal side,” the trader said via Viber.

Meanwhile, ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said the government is possibly seeking more funds for the acquisition of COVID-19 vaccines.

“This is likely a pre-funding exercise for next year to help fund COVID-19 relief efforts with the most glaring need being funding for millions of vaccine doses for the (108 million)population,” he said in an e-mail.

“Currently, the vaccine czar (Carlito Galvez, Jr.) indicates that the budget allocated to him affords him a mere 20 million doses per year, which would mean a long wait of up to five years before we can get the target 60% of the population vaccinated,” Mr. Mapa added.

The Philippines last week signed its first supply deal for the vaccine, getting 2.6 million doses from AstraZeneca. It is also in talks with other drug makers.

As of Wednesday, the Health department reported 1,438 new COVID-19 infections, bringing the total to 434,357. — Reuters with K.K.T.Jose

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